Happiest Minds shares fall 8% after ITC Infotech deal; stock down 18% in 2026
Add Preferred News Source
Happiest Minds shares fell 8% after ITC Infotech agreed to buy a 22.1% stake and merge the two IT services businesses.
Shares of Happiest Minds Technologies Ltd fell sharply in morning trade on Tuesday, September 1, after ITC Infotech announced a deal to acquire a 22.1% stake in the Bengaluru-based IT services company for ₹1,329.72 crore.
Happiest Minds shares dropped as much as 8.39% during the session to ₹372.80. The stock was trading around ₹373 in morning deals, down about 8.3% from its previous close of ₹406.95.
The decline has added to the stock's losses this year. Happiest Minds shares are down 18.3% so far in 2026, compared with an 8.1% decline in the benchmark Nifty 50. The company's market capitalisation stood at around ₹5,682 crore.
The sharp fall came after the company disclosed a promoter stake sale to ITC Infotech, which is the IT services arm of ITC Ltd. The transaction is also the first step towards a larger merger between Happiest Minds and ITC Infotech.
Shares of ITC Ltd, meanwhile, were trading around 3% higher during Tuesday's session.
Happiest Minds shares fall after promoter stake sale
Happiest Minds founder and executive chairman Ashok Soota and Ashok Soota Medical Research LLP have agreed to sell a combined 22.1% stake in the company to ITC Infotech.
The stake represents around 3.37 crore shares of Happiest Minds. The acquisition will be carried out in two tranches, with the pricing differing slightly between the two transactions.
In the first tranche, ITC Infotech will acquire an 11% stake, comprising around 1.68 crore Happiest Minds shares, at ₹390 per share. The transaction is valued at ₹653.26 crore.
The second tranche involves the purchase of another 11.106% stake, or around 1.69 crore shares, at ₹400 per share. This part of the transaction is valued at ₹676.46 crore.
The first tranche price of ₹390 represents a discount of around 4.2% to Happiest Minds' previous closing price of ₹406.95. The second tranche price of ₹400 is around 1.7% below the previous close.
The acquisition will be funded through a ₹1,330 crore rights issue. The promoter stake sale will then be followed by the proposed amalgamation of Happiest Minds with ITC Infotech.
The transaction is subject to the required statutory and regulatory approvals. These include approvals from the Competition Commission of India, stock exchanges, the National Company Law Tribunal and shareholders.
The board of ITC Ltd has already approved the proposed transaction.
Under the proposed arrangement, the two companies will continue to operate separately until the necessary approvals are received and the merger is completed.
ITC Infotech-Happiest Minds merger: What shareholders need to know
Once the stake acquisition is completed, Happiest Minds will be merged with ITC Infotech. The proposed share-swap arrangement will determine the holding of existing Happiest Minds shareholders in the combined company.
Shareholders of Happiest Minds other than ITC Infotech will receive 25 fully paid-up shares of ITC Infotech for every 81 Happiest Minds shares held by them on the record date.
Following the merger, the combined entity is proposed to be listed on both the BSE and NSE. Happiest Minds will cease to exist as a separate listed company once the scheme becomes effective.
The transaction also provides ITC Infotech with a route to the stock market through its merger with Happiest Minds.
ITC Ltd is expected to hold around 73.4% of the combined company after the transaction, while existing Happiest Minds shareholders are expected to own the remaining 26.6%.
The latter holding will include around 7.6% that is currently held by Happiest Minds' promoters, who will be reclassified as public shareholders, while the remaining roughly 19% will be held by other public shareholders.
The companies expect the merger process to take around 15 months, subject to the necessary approvals.
Happiest Minds said the transaction values the company at 15.1 times EBITDA, compared with 13.6 times for ITC Infotech. ITC Infotech is around 2.17 times larger than Happiest Minds in terms of revenue and profit and also has a higher cash balance.
The combined business is targeting revenue of more than $1 billion by FY28. On a pro-forma basis, the merged entity had an operating margin of around 18-18.3%.
Happiest Minds said the two businesses have complementary capabilities and there is no meaningful overlap among their top customers. The company expects the combination to improve the scale and competitive positioning of the merged business as it takes on larger IT services players.
Happiest Minds also said that detailed integration discussions between the two companies have not yet taken place. It added that there will be no open offer under the current transaction structure.
Also Read - Skyways Air Services IPO Listing: Shares List At Over 9% Discount
This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, Visit www.kotakneo.com/disclaimer
Rochelle Britto has spent 8+ years decoding India's markets, businesses, and consumer economy, reporting for ET Prime and Times Internet along the way, covering the stories behind the numbers.
A Mumbai native and perpetual planner of the next holiday, she stays far, far away from the eternal question, “Where are we going next?” When she's not chasing headlines, she's chasing new cultures, open roads, and a bit of quiet in nature.
Right Tools, Rich Insights
